Stolen Property. A bona fide purchaser obtains no title against one from whom the goods were stolen, except in the case of negotiable instruments.

Federal Reserve Notes are negotiable instruments. Bitcoin is meant to pass like money but they are not promises to pay.They aren't chattel either. They are more like an incorporeal hereditaments.

It's so new and original I don't think anything in present law encompasses them completely. However the fact that is meant to pass like money would incline the courts to treat it as a negotiable instrument. The reason negotiable instruments are excepted from the rule regarding stolen property was the "necessities of commerce and sound public policy".

That doesn't mean someone in possession of stolen goods that has notice of the good's tainted character gets a free pass. They can still be sued for it's value. Their recourse is to sue the person they received the stolen property from ....up the chain of transfers to the original thief.

So why does anyone else need to participate, when the exchanges can just watch for such annotations?

You are right. Exchanges can watch for such annotations, and I hope they will do it.However, it is currently complicated to track stolen coins, and exchanges might have other priorities.If a website makes that information publicly available for everyone, then I guess exchanges will have an incentive to use it, because they do not want to return stolen coins to their clients.

What happens if Bitcoin does reach the point where it has utility outside of converting to fiat after being stolen?

This is a bit far fetched... anyway, if Bitcoin ever reaches that point, it will be much less vulnerable than today. Currently, the Bitcoin economy is not safe at all; it is threatened by the fact that exchanges might be shut down and their bank accounts frozen. This is my main concern, and what I propose is a solution for today's problems.

This is the job of the police. When someone goes to the police and files a complaint, there is always the possibility that he made it up. The website would require a police report in order to flag coins as stolen.

IMHO, this whole idea just makes Bitcoin far less attractive than the possibilities for irrecoverable theft ever did.

Seriously ? for thieves and scammers, maybe. But some people here would like to expand the Bitcoin economy to other circles of society.

In any case, what I propose is not to change Bitcoin, but only to make some information available. Bitcoin is not really anonymous, and the idea that you can use Bitcoin anonymously is a misconception. This misconception has led some US senators to call for a shutdown of exchanges. Let us try to avoid that.

This is the job of the police. When someone goes to the police and files a complaint, there is always the possibility that he made it up. The website would require a police report in order to flag coins as stolen.

This is a good idea , but I would go one step further. The complaint must be verified under the penalty of perjury and/or supported by sworn affidavit. That way not only are they under the jeopardy of failing a false report there is also the jeopardy of perjury.

Seriously ? for thieves and scammers, maybe. But some people here would like to expand the Bitcoin economy to other circles of society.

Yes, seriously. If a consumer gets their shit robbed from their bank accounts, or their credit card gets cloned... it's a minor inconvenience, but they're mostly not liable for very much of it at all. With Bitcoin the opposite is true, but with the caveat that your money's much more secure if you're super-human enough to follow all the best practices to a T (though I'd imagine this part will get better).

You're trading away all the cute things about Bitcoin, in exchange for bringing back a little bit of security from the system that's already there. Except this security is nowhere near as good, because you basically have to wait for the person to try cash the coins out in order to have any chance at pressing charges. Furthermore, all it takes is for someone to figure out a way around the scheme and it all falls apart.

Last time I checked, neither USD cash nor gold ingots nor digital stuff like Pecunix or Liberty Reserve have an open "scum-tracker" annotation system built into them (though I think that Libres and Pecunix logs are probably quite long-lived ones).

None of those systems fail because their respective value storage units can be stolen and no system is readily available to track the lost resource (I could, theoretically, track down a local goldbug and raid his coin storage, and there would be no way to provably discern gold so procured from "legitimate" gold... however, and strangely enough, that does not seem to decrease the viability of gold).

Thus, I am profoundly unconvinced that there exists a need for such system in the bitcoin environment. Of course, in a libertarian setting, everyone is free to set up their little bitcoin annotation service I, for one, prefer #bitcoin-police due to the fact actual intelligent agents are involved, as opposed to a blind and deaf script recording every claim John Doe makes in regards to a given bitcoin address / transaction

Geist Geld, the experimental cryptocurrency, is ready for yet another SolidCoin collapse